Allowed

M/S. Uco Bank v. Aurora P G College

DRT19 Sept 2025OA/173/2022

Case brief

AI extract

What is this about?

The Debts Recovery Tribunal allowed the bank's original application for recovery of dues from educational institutions. The court held that documents were unchallenged due to lack of evidence from defendants and rejected the plea for reduced interest, noting the institution was not a registered charitable body.

What did the court decide?

Defendants liable to pay total sum of Rs.1,64,77,107/- with future interest at 13.35% p.a. Applicant entitled to proceed against properties and persons.

M/S. Uco Bank versus Aurora P G College — Contract and Commercial Disputes | DRT (2025)

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IN THE DEBTS RECOVERY TRIBUNAL-II AT HYDERABAD DATED THIS THE NINETEENTH DAY OF SEPTEMBER, 2025

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PRESENT: SH. RAMESHWAR KOTHE, B.Com, L.LB.^(Hons.), M.A. PRESIDING OFFICER

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ORIGINAL APPLICATION NO. 173 OF 2022

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M/s. UCO Bank M.G. Road Branch 62, MG Road Secunderabad Hyderabad-3 Rep by its Senior Manager.

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.......Applicant.

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Versus

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Aurora P.G. College Represented by its Secretary G-2 SBI Colony, Bagh Amberpet Hyderabad-500013.

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Aurora Educational Society, Street No. 12, Chikkadpally, Hyderabad - 500020.

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Mr. N. Raja Babu S/o. Mr. Late N. Seethaiah, Chairman, Tarakarama Educational Society, G-2, SBI Colony Bagh Amberpet, Hyderabad - 500013.

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Mrs. N. Yashoda Wo^{Mr. Late N. Seethaiah,} 2-2-647 /77/G2 Bagh Amberpet, Hyderabad.

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Mr. N. Ramesh Babu S/o Late N. Seethaiah, General Secretary Tarakarama Educational//^v^**,.4\

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u/^,,o:,

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oA.fil2022

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	Society, G-2,SBIColony BaghAmberpet, Hyderabad-500013.
6.	Mrs. N.Sulochana W/oMr.N. RajaBabu, G-2,SBIColony BaghAmberpet, Hyderabad-500013.
7.	Mrs.N.Manjusha
	W/olYr.N.RameshBabu, G-2,SBIColony BaghAmberpet, Hyderabad-500013.
8.	Ms. Mounica
	D/oN.RajaBabu
	G-2,SBIColony BaghAmberpet, Hyderabad-500013.
9.	Mr.N.Anudeep, G-2,SBI Colony BaghAmberpet,
	Hyderabad-500013.
10.	KarshakVidyaParishad, G-2,SBI Colony BaghAmberpet, Hyderabad-500013.
11.	TarakaramaEducational Society, Representedby itsChairman, G-2,SBI Colony,BaghAmberpet, Hyderabad-500013.
72.	KamareddyEducational Society, G-2,SBIColony,BaghAmberpet, Hyderabad-500013.
13.	Church Educational Society, G/2,SBI Colony,BaghAmberpet, Hyderabad, Telangana-13.
	dW"^'o

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oA.77312022

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Ravi Rishi Educational Society, G-2, SBI Colony, Bagh Amberpet, Hyderabad - 500013.

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..... Defendants.

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Counsel for the Applicant Counsel for Defendants

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: lvlr. N.V. Subba Raju.

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: M/s. V.V. Ramana.

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:: (lli._DER ::

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The Applicant Bank filed the present OA u/s 19 of The Recovery of Debts & Bankruptcy Act, 1993 for recovery of a sum of Rs.1,52,01,805/- towards Cash Credit account and Rs.72,L5,2061- towards FITL account from defendants with further interest @ 13.35o/o and 13,45o/o^per annum respectively with monthly rests from 23.11.2021 till the date of realisation and sale of OA schedule assets.

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The averments of applicant bank as^per the OA, briefly, are that 2nd defendant established 1"t defendant institute. Defendants¹ and 2, represented by its Secretary, availed a loan^of Rs.1,25,00,000/- on 04.09.2008. Defendant No.1 executed the required loan documents/hypothecation agreement. The rate of interest of the loan facility was t6o/o^p.d. with monthly rests subject to revision. Defendants 3 to 7 and 10 to 14 stood as guarantors and executed agreements of guarantee dated 04.09.2008. The credit facilities were renewed on 05.03.2015 and 25.09.2018, and the defendants executed^requisite documents for the^purpose. Defendants 3 to 7 and¹⁰ to¹³ confirmed/extended mortgage against OA^B-schedule immovable^properties on 16.11.2018. Defendants availed FITL during Covid.19^period on 06.09.2020. Defendants defaultedⁱⁿ repayment leading to classification of. loan account as^NPA,

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},.ot

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oa.17312022

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followed by demand notice u/s 13(2) of SARFAESI Act dated 27.06.2027 and legal notice dated 01.11.20211. However, defendants failed to clear the dues. Hence, the^present OA.

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Defendant No.1 filed written statement and defendants 2 to 14 adopted the same. The averments of the written statement, in brief, are that while admitting sanction of loan of Rs.1,00,00,000/- on 04.09.2008, defendants deny availment and renewal of loans. Defendants further deny execution of loan documents/guarantee and mortgage agreements, renewals/enhanced limits/FlTl in 2008, 2015, 2018 and 2020. Defendants were made to sign various blank papers/ documents/vouchers/agreements/letters without their free will which were subsequently filled ln by the applicant bank for the purpose of the OA. Mere signatures of the defendants do not constitute valid execution and subsisting right against the defendants. Hence, the documents are not admitted by the defendants. The accounts were classified as NPA without following the provisions of RBI norms. Therefore, the demand notice dated 21.06.2027 is liable to be set aside. They deny of issuance of legal notice dated 01.11.2021. Applicant failed to take into consideration the payments made by defendants correctly while filing the present OA. Applicant added premature interest in the OA claim amount. The statement of account is not in terms of the provisions of the Bankers Book of Evidence Act, 1891 and the certification was not given by the competent persons. Applicant ignored the losses and damages suffered by the 1st defendant and filed the present OA on vague, baseless and concocted grounds. The OA claim is barred by limitation. Applicant bank is not entitled to the OA claim or for sale of OA sched u le asset.

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oa.173/2022

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During the pendency of OA, learned counsel appearing for the applicant filed a Memo reporting the demise of Defendant No.3 and defendants 6, 8 and 9 LRs of defendant No.3 being already parties to the OA proceedings, are liable personally for payment of credit facilities and also to the extent of property of defendant No.3.

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The Applicant Bank examined K.R. R. Rajyalakshmi, Chief Manager as AW-1 and marked 19 documents through her as Ex. A.1 to Ex. A.19.

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Heard learned counsel appearing for the applicant and learned counsel apPearing for the defendants. Perused the written arguments filed by the defendants and the material placed on record.

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Learned counsel appearing for the applicant bank would submit that the defendants have failed to discharge the liability desptte notice. He contended that the OA claim is amply proved through the evidence affidavit of AW-1 coupled with recitals in Exs.A.1 to A.19 and accordingly prayed to allowing the OA against the defendants l, 2, 4 lo 14 and against OA schedule properties.

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Learned counsel appearinq for the defendants would contend that the applicant has filed the present OA by apptying abnormal rate of interest and without providing any statement of account to enable them to reconcile with their accounts to know the accurate dues. Learned counsel would submit that the applicant bank has not taken into account the deposits made by the defendants. Defendants cleared FITL loan of Rs.!s,22,296/and deposited Rs.52,42,000/- into the loan account. The ,/)0arr,,.. -r^

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u"^'u^

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oA.L73l2022

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applicant bank has to deduct these amounts form the loan account. Applicant bank is required to charge simple rate of interest taking into account the fact of defendant being an educational institution. Therefore, learned counsel prayed for allowing 67o interest per annum. In support of his arguments, learned counsel placed reliance on the following judgements:-

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(i) Hon'ble High Court of Kerala in W.P. (C) No.79S8 of 2020 dated 10.08.202 between Swaroop vs. State of Kerala & Or* in WP(C) No.7988 of 2020 decided on 10.08.2023;

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(ii) Hon'ble DRAT, Madras in Karur Vysya Bank Ltd. vs. V.T.C. Builders and Anr. decided on 15.03.2002 (Eq. r (2003) BC 43;

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(ii, Hon'ble DRAT, Kolkota in Smt. D. Sandhya Bhaskar Sridevi and D. Srinivasa Prasad Reddy in Appeal No.l16 of 202j decided on 15.05.2024.

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The point that arises for consideration is:-

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Whether the Applicant Bank is entitled for the OA claim against the Defendants l, 2 and 4 to 14 and against the OA schedule assets as prayedfor?

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Defendants alleged various irregularities and lapses on the part of the applicant bank. However, despite contending so, they failed neither to produce any documentary evidence in support of their contentions nor did they cross examine AW.1 to disprove the averments basing on the documents filed by the applicant bank. Under such circumstances, the evidence affidavit of AW-1 and the Exhibited documents through her remain unchallenged and unrebutted.

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Learned counsel for the defendants, during his arguments,

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prayed for consideration of future interest @60lo per annum in %a're

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oA.L73l2O22

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the light of the^judgements cited supra for the reason of the loan having been availed for running the educational institute of defendant No.1.

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t2. In the case of Karur Vysya Bank (supra), the relief sought for was with regard to the rate of interest. In the cited case, the borrower had already paid a sum of Rs.15,42,945/- and agreed to pay the entire balance amount with 60lo simple interest from the date of plaint till 29.11.1999, the Court fee and Advocate fee before the learned Presiding Officer passed the order on 29.11.1999. The total interest amount, adding the Court fee and Advocate fee works out to Rs.5,23,488/- and the balance suit claim works out to Rs.28,574l- totalling to Rs.5,52,062/-. The defendants paid the entire balance amount of Rs.5,52,062/by way of a cheque. Considering these aspects, learned Presiding Officer ordered on 30.11.1999 to pay 60lo simple interest from the date of plaint till 29.11.1999 basing on the judgement of the Apex Court reported in N. M. Veerapoa v. Canara Bank-II^(199& SLT 361. Needless to elaborate or emphasise the exclusivity of the cited case and why the said ratio in the cited case cannot be applied to the case on hand.

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In the judgement of Hon'ble DMT, Kolkata in Appeat No.116 of 2023 gupra), the issue pressed in the appeal was on the point of rate of interest only. In the cited case, the borrower challenged the rate of interest granted by DRT in the OA. It may not be out of place to mention here that the appeal before DRAT is subject to payment of 50o/o of the disputed amount before entertaining the appeal itself. Whereas, in the case on hand, the bolrower has not deposited any amount since the fiting of tne Ory/ffi*$

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OA.L73|2O22

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t4. Before coming to any conclusion for granting relief on the rate of interest, I deem it appropriate to take into consideration the following aspects:-

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a) Firstly, the defend a nt-borrowe r is not a charitable institution or NGO established for promoting education.

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b) Secondly, as already stated supra, in Karur Vlsya Ba,rk case, the borrower already deposited entire disputed amount before the date of order of the learned Presiding Officer. Whereas in the case of Smt. D. Sahdh),n Bhaskar Sridevi & Another, entertalnment of appeal before the DRAT itself is subject to deposit of 50o/o of the dues stipulated u/s 2\ of the RDB Act. However, in the case on hand defendants have not made known their intention or willingness to deposit the disputed amount either in part or in full unlike in the cited cases.

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c) Thirdly, relief in rate of interest cannot be a uniform norm and the same has to be considered^judiciously taking into account the facts and circumstances, flnancial stakes involved and bonafides of the borrower.

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Though the defendants in para 6 of the written arguments claimed to have cleared the FITL loan of Rs.12,68,000/- besides Rs.93,50,936/- being deposited into the loan account, no evidence is placed on record to substantiate the same. Hence this aspect needs no consideration.

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In the entire pleadings the defendants denied each and^every averment of the OA including execution of loan documents itself. They totally rejected the OA claim and^{questioned the} competency of person certifying the statements of account. There is no remorse on the part of the defendants for^not discha rging the liability. On the other hand, -they^{prayed for} /1ry.*9

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A/^{''\c.-.</sup>}

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oa.L73l2022

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discharging them from the liability with costs. Further, the pleadings are centred on in alleging irregularities in NPA classification, making use of blank/printed documents for filing the OA etc. Except making bald assertions, defendants did^not choose to substantiate the same by^placing any essential particulars/material on record. Nor did they choose to confront and cross examine AW.1 to substantiate their contentions. The contractual rate of interest as per Ex.A1^promissory note date wES 160lo. Whereas the rate of interest claimed in the OA is for 13.359o. Therefore, applicant bank voluntarily decreased the rate of interest to 13.35% from the contracted rate of 1670.

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In view of the foregoing observations, facts and circumstances of the case and the Evidence Affidavit of AW.1 coupled with the recitals in Exs. A.1 to A.19 marked on behalf of the Applicant 8ank, I hold that Defendants 7, 2 and 4 to 74, joinHy and severally and defendants 6, 8 and 9 to the extent of estate of deceased defendant No.3, are liable to pay the OA claim to the Applicant Bank with future interest and costs.

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In the result, the present Original Application No.L73/2022 is allowed as under: -

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i) the defendants 7, 2 and 4 to 14 joinfly and severa y and defendants 6, 8 ani 9 6 ih; extent of the estate of defendant ruo.i-no,i tying in their hands, are fiaOfe to pay io i - ne applicant bank a total^..rr--oi Rs.t,64,77,107/_ (ns.r,SZ,Or,89i7- a# Rs.72,75,206/_) atonq wiitr^,tnterest -'6 13.35Vo per annum siirple f.om tne Oui" o*'f apptication tilt the date oi realizationj

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,,) ll."^^.gl .ctaim is secured by way of nypothecation/mortgage ot property as ffin"e

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oA.L73l2022'

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described in the schedules to the OA and the applicant bank is entiiled to proceed against the same for recovery of its dues;

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